US service economy eases further in October: ISM

The US service economy remained elevated in October, although the rate of growth continued to ease off the summer highs, as a steady stream of new orders supported another month of job creation.

The Institute for Supply Management’s gauge of national service activity declined to 57.1 from 58.6. A median estimate of market analysts called for a decrease to 58.6.

The US service economy has been above the 50 mark that separates expansion from contraction for 57 consecutive months. However, the rate of growth continued to drift steadily from August’s post-recession high of 59.6.

A total of 16 non-manufacturing industries expanded in October, led by construction, retail trade, and agriculture, forestry, fishing and hunting. The two industries reporting contraction were arts, entertainment and recreation, and financial services.

Overall business activity eased in October, but maintained a robust growth pace. Business activity increased for the sixty-third consecutive month, as 15 industries reported gains. The gains were led by mining, construction and real estate, ISM said.

New orders growth remained strong in October, although the rate of growth eased from the previous month. A total of 11 non-manufacturing industries reported an uptick in new orders, led by real estate, rental and leasing, and the information industry.

New export orders increased for the seventh consecutive month, albeit at a slower rate than in September. A total of seven industries reported higher new export orders, ISM data showed.

“The general business outlook is favorable. Approaching 2015 with cautious optimism,” said one manager from the financial services industry.

“Business activity remains robust here,” said another manager from the utilities industry.

However, other purchasing managers were more cautious.

“Economy appears to be slowing. Fears of ISIS, Ebola, etc.” said one manager from the professional, scientific and technical services industry.

Added a manager in accommodation and food services, “Sales very sporadic. It’s up and down weekly.”

Services sector employment increased for the eighteenth consecutive month in October, led by construction, transportation and warehousing, and retail trade. In total, ten industries said they increased payrolls last month, while four industries indicated a reduction in employment.

The private services sector added 181,000 payrolls last month, up from 176,000 in September, the ADP Institute reported today. The gains were led by the professional/businesses sector, which added 53,000 jobs last month. Employment in trade, transportation and utilities increased 47,000 in October. Employment in financial services increased 4,000, ADP data showed.

The Labor Department on Friday will release official employment figures for October. The US economy is expected to add more than 200,000 jobs for the seventh time in eight months. The unemployment rate is forecast to hold steady at 5.9 percent, a six-year low.
A separate gauge courtesy of Markit Group confirmed today US services output slowed to a six-month low in October, as business activity continued to ease from June’s post-recession peak. Markit’s services PMI indicator declined 1.8 percentage points to 57.2.

A separate gauge courtesy of Markit Group confirmed today US services output slowed to a six-month low in October, as business activity continued to ease from June’s post-recession peak. Markit’s services PMI indicator declined 1.8 percentage points to 57.2.

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